GST News and Updates - June 2020

Clarifications on Law and Procedure

Levy of GST on remuneration paid to directors of a company

Circular 140/2020 clarifies the applicability of GST on remuneration paid to directors of a company.

Remuneration paid to whole time directors and independent directors who are not employees of the company is taxable in the hands of the company under reverse charge mechanism.

Remuneration paid to directors who are employees of the company could take two forms.

  • One could under an employer-employee relationship with remuneration paid as salary for which Income Tax TDS is deducted under section 192 of the Income Tax Act, and recorded in the company's books of accounts under the head "Salaries". This transaction is not treated as a supply under GST (See Schedule III of CGST Act, 2017) and is not a taxable transaction.
  • The other could be remuneration for professional service rendered by the director for which Income Tax TDS is deducted under section 194 J of the Income Tax Act. This transaction is treated as supply and is taxable in the hands of the company under reverse charge mechanism (assuming that the director does not have a GST Registration).

Changes to return filing procedure

Relief offered to Taxpayers

Extends time period to issue order for rejection of refund

In view of the Covid-19 pandemic, CGST Notification 46/2020 extends the time available to officers to issue an order for rejection of refund of tax under Section 54 of the CGST Act, 2017.

E-Way bill validity

For E-Way bills generated on or before 24th March 2020, and expiring after on or after the 20th March 2020, CGST Notification 47/2020 extends the validity to 30th June 2020.

Zero late fee for Nil Returns and Limit on Late Fee for late filing of old GSTR-3B Returns

As an one time amnesty measure, for GSTR-3B returns for the periods July 2017 to January 2020, filed between July 1, 2020 and September 30, 2020, Notification 52/2020 sets the late fee as follows

  • For Nil Returns, there is no late fee
  • For non-Nil Returns, the late fee is capped at Rupees Five Hundred per return.

Relief in payment of interest

Earlier, relief in payment of interest was conditional on when the taxpayer filed GSTR-3B. Notification 51/2020 provides further relief and provides the following interest calculation (unrelated to when GSTR-3B is filed).

Taxpayers with Aggregate turnover > Rs. 5 Crore in the preceding FY

Tax PeriodDue DateNo interest payable tillPeriod for which interest is payable @9%Date from which interest is payable @18%
Feb 202020th March, 20204th April, 20205th April, 2020 - 24th June, 202025th June, 2020
Mar 202020th April, 20205th May, 20206th May, 2020 - 24th June, 202025th June, 2020
Apr 202020th May, 20204th June, 20205th June, 2020 - 24th June, 202025th June, 2020
May 202027th June, 202027th June, 2020-28th June, 2020

Taxpayers with Aggregate turnover up to Rs. 5 Crore in the preceding FY (Group A states)

Tax PeriodDue DateNo interest payable tillPeriod for which interest is payable @9%Date from which interest is payable @18%
Feb 202022th March, 202030th June, 20201st July, 2020, - 30th September, 20201st October, 2020
Mar 202022th April, 20203rd July, 20204st July, 2020, - 30th September, 20201st October, 2020
Apr 202022nd May, 20206th July, 20207th July, 2020, - 30th September, 20201st October, 2020
May 202012th July, 202012th September, 202013th September, 2020, - 30th September, 20201st October, 2020
June 202022nd July, 202023th September, 202024th September, 2020, - 30th September, 20201st October, 2020

Taxpayers with Aggregate turnover up to Rs. 5 Crore in the preceding FY (Group B states)

Tax PeriodDue DateNo interest payable tillPeriod for which interest is payable @9%Date from which interest is payable @18%
Feb 202024th March, 202030th June, 20201st July, 2020, - 30th September, 20201st October, 2020
Mar 202024th April, 20205th July, 20206th July, 2020, - 30th September, 20201st October, 2020
Apr 202024th May, 20209th July, 202010th July, 2020, - 30th September, 20201st October, 2020
May 202014th July, 202015th September, 202016th September, 2020, - 30th September, 20201st October, 2020
June 202024th July, 202025th September, 202026th September, 2020, - 30th September, 20201st October, 2020